Asia Coal-Australian thermal coal prices flat in Chinese holiday week

Reuters Staff

3 Min Read

PERTH, Oct 4 (Reuters) - Australian thermal coal prices were flat this week in thin trading during China’s Golden Week holiday, while Tohoku Electric Power and Glencore Xstrata set October quarter thermal coal import prices about 10 percent lower than a year ago.

Last Friday, the weekly globalCOAL index closed at $79.59 per tonne, up 5 cents on the week.

A 25,000 tonne cargo traded for $80.50 on the globalCOAL platform on Thursday.

“It’s been a quiet week because of the Golden Week holiday,” one Singapore-based coal market source said, adding that falling freight rates may lend some support to the market once Chinese buyers return next week.

The October contract between Tohoku and Glencore, which prices coal procured between October 2013 and September 2014, was priced around $86 per tonne and will be used as the benchmark for other Japanese utility coal settlements.

The Japanese fiscal year contract for thermal coal for the year beginning April 1, considered the benchmark for the year, settled at $95 per tonne.

Australian coal prices have plummeted from the record high of $130 per tonne seen in 2011, when floods in Australia led to a supply shortage, as global demand, especially from top consumer China, has waned.

Chinese domestic coal prices were at a four-year low of 531 yuan ($87) per tonne last week, according to the Bohai-Bay Rim Steam Coal index.

But some said the Chinese thermal coal market may be on the cusp of a turnaround.

“Traders suggest downside price risk in China’s market is reportedly small now, suggesting seaborne prices are close to their floors,” UBS said in a note this week.

The Singapore Exchange (SGX) said it would launch two thermal coal futures contracts on Oct. 21, hoping to tap into growing demand for hedging tools in Asia after the steep drop in coal prices this year.

Last week, China’s first thermal coal futures contract made a strong debut on the Zhengzhou Commodity Exchange.